How The Gig Economy Can Help Workers Thrive Through Automation

All across America, there are individuals and regions thriving through technological change; one of the fascinating patterns of the most resilient workers and communities is how they mix self-employed contract work and wage work in the same week. While the "gig economy" is often criticized, there has been a string of recent research looking how self-employed contract work is used to offset unexpected expenses, help regions rebound from the recession, and allow workers to gain new skills for a smoother occupational transition. That is, for many people, gig work is both a tool for economic security and upward mobility.

(Disclosure: I am a contractor with Tech4America, a tech policy nonprofit.)

Inspired by research like this and stories around America, I began an economic research* project looking at how self-employed part-time contract work was helping people deal with displacement. I've spoken to factory workers that do travel planning on the side and heard of stay-at-home moms who got high-paying software programming jobs after freelancing between watching the children and work.

I recently released my findings in a new draft report, which explores several public datasets of multiple job-holding and job displacement. My research confirms both the good things about the gig economy and the worst fears. In aggregate, multiple job-holding (a good proxy for those in the gig economy) is associated with lower income for workers who lose their job. On average, those with multiple jobs retain 62% of their previous weekly earnings, compared to single job-holders who retain about 68%.

But, this doesn't tell the whole story. Economist Georgios Panos found those who use secondary jobs for "skill diversification" often end up doing better after switching occupations. This is what I found as well, with skilled secondary job holders earning on average 122% of previous earnings.

Just as important, it appears that there is a ton of opportunity to use side work to gradually transition between occupations. Depending on the dataset used, many of the fastest growing occupations to appear to be between 5% to over 50% of all income opportunities. There's a lot of healthcare, teaching, and electrician income opportunities out in the economy right now, but they are part-time. Part-time work may not pay all of the bills, but it is valuable job experience that can help smooth transitions.

Of course, labor laws will need to change in order to support the new world of work. The Aspen Institute's Future of Work initiative has done great work looking at how to create "portable benefits", such as healthcare and paternity leave, that are independent of any one employer. Others have looked at expanding wage subsidies, such as the Earned Income Tax Credit.

But, if the right policies can be found, there's a good chance that automation will create a world with much more fulfilling and creative work than ever before. It will require uncomfortable trade-offs and moving beyond the traditional single-employership model. But, I suspect a much more inclusive economy is possible in the future.